Yahoo Goes Hollywood for CEO

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Yahoo Goes Hollywood for CEO

Terry Semel, the man Yahoo just tapped to head its global Internet business, said he really wasn't looking for a new job.

After spending 19 years as chairman and co-CEO of the Warner Brothers media empire, Semel stepped down 14 months ago with plans to spend his time as "a student of the Internet." He put together a private investment fund and spent much of 2000 meeting with Net firms seeking funding.

"I wasn't necessarily looking to be a corporate chairman or CEO again," Semel said Tuesday.

That all changed when Yahoo (YHOO) came knocking on his door this spring. Tim Koogle, Yahoo's chairman and CEO of the past six years, announced in March he planned to step down. Yahoo co-founder Jerry Yang said Semel was one of the first candidates the company put on its list of potential successors.

Yang said the search team focused on Semel largely because they believed his post at Warner Brothers required many of the same skills needed to run a company like Yahoo.

Both companies, he noted, have ample overseas operations and have faced pressure to expand rapidly outside their main area of business. Yang said Semel played an instrumental role in increasing Warner Brothers' total revenue from under $1 billion to close to $11 billion.

Numbers aside, Yahoo's selection of Semel also adds a distinctive Hollywood flavor to what has long been a quintessentially Silicon Valley firm. The company also adds an executive who is well known in media and entertainment circles.

Semel's 24-year legacy at Warner Brothers is linked closely to that of his longtime business partner, Bob Daly. The two men served as co-chairman and CEOs of the studio until their joint departure in October 1999.

Under their leadership, Warner Brothers branched out into new venues, including the development of a network of Internet sites. Semel and Daly also played a role in launching the WB television network, creating a vast film and television library, and introducing DVD recordings.

During their tenure, Semel and Daly oversaw a string of high-budget films with star-studded casts that included the Batman and Lethal Weapon series. Under their auspices, the studio also launched three Best Picture Academy Award winners: Chariots of Fire,Driving Miss Daisy and Unforgiven. Their careers at Warner Brothers also included some high-profile flops, including the costly and critically panned 1997 flick The Postman.

Perhaps more relevant to his new job is Semel's experience in the Internet business, which has included a few disappointments. One of those was Entertaindom.com, a Web entertainment hub started by Warner Brothers that parent company AOL Time Warner has since shut down. Semel said the site shared the same fate as countless other once-promising Internet ventures that proved to have been launched "a little too early."

Another unfortunate investment was one that Semel made in Digital Entertainment Network, or DEN, which offered original programming online but flamed out in May 2000.

By joining Yahoo, Semel links his fate with a company that has achieved phenomenal success drawing traffic from across the world. In the month of March, Yahoo said it was visited by more than 192 million different users worldwide.

However, Semel joins the firm at time when Yahoo, along with the rest of its Internet brethren, is facing tough economic conditions. Confronted with shrinking advertising revenues as many of its dot-com customers scale back or shut down, Yahoo reported a loss in its most recent quarter. The company also announced last week that it would lay off approximately 12 percent of its staff.

In comments made during a Tuesday press conference, Semel said Yahoo is facing the kinds of troubles he's familiar with.

"The situation at Warner Brothers in 1980 was quite similar to Yahoo in 2001," Semel said. Both companies were aware that their main sources of revenue (movie sales for WB and advertising for Yahoo), were at least temporarily on the decline. Both were under pressure to come up with new money-making strategies. And both were viewed among investors as possible targets for a takeover.

Yahoo executives skirted the issue of whether the online giant is being eyed as a takeover candidate. However, the company made it clear that whatever happens in the long-term, its executive team is handing over to its new CEO a larger-than-anticipated share of responsibility for running the company.

Although Yahoo had originally expected to keep Koogle in the chairman's position, it decided to hand that post to Semel. Koogle, who will serve as vice chairman until August and remain on Yahoo's board, said the decision was intended to ensure "there's absolutely no question about who's running the company."

Yahoo executives also hinted that Semel will be compensated handsomely for his new duties. The incoming CEO purchased one million shares of Yahoo stock and will get an undisclosed salary and stock option package that Yang said "is consistent with the level being paid to our most senior executives."